By Carl L. McWilliams
August 28, 2026
Friedrich August von Hayek would likely recognize immediately that artificial intelligence presents a legitimate public-policy challenge unlike any encountered during his lifetime. Autonomous AI systems possess capabilities that can influence national security, financial systems, critical infrastructure, scientific discovery, and military planning. A constitutional government would therefore have a legitimate interest in understanding these systems before their widespread deployment.
Yet Hayek would almost certainly ask a different question than many contemporary commentators. He would not first ask whether artificial intelligence is dangerous. He would ask whether the institutional architecture designed to govern artificial intelligence assumes knowledge that no central authority can actually possess.
That question lies at the heart of The Use of Knowledge in Society.
The Knowledge Problem
Hayek's most enduring contribution was not a defense of business interests, nor even a defense of markets in the abstract. It was an epistemological argument. Knowledge relevant to social coordination exists in dispersed form throughout society. Much of that knowledge is local, tacit, contextual, and constantly changing. No ministry, commission, planning board, or executive office can collect it all because much of it does not exist until millions of individuals interact, experiment, succeed, fail, and adapt.
Economic order therefore emerges through decentralized processes rather than centralized design. Artificial intelligence magnifies this insight.
The capabilities of a frontier model cannot be understood solely by examining its parameters inside a secure government laboratory. Its social significance emerges only after millions of individuals combine it with proprietary data, local workflows, specialized expertise, entrepreneurial imagination, institutional incentives, and unforeseen applications.
The relevant knowledge does not reside exclusively inside the model. It resides throughout the society that uses the model.
The Executive Order
President Trump's June 2, 2026 Executive Order attempts to address genuine national-security concerns through voluntary cooperation rather than mandatory licensing. The framework offers leading AI developers an opportunity to provide federal experts with up to thirty days of pre-release access to qualifying frontier models for cybersecurity evaluation while initially excluding open-weight models. Hayek would likely appreciate several features of this approach.
- The framework rejects comprehensive nationalization of AI development.
- It avoids universal licensing.
- It preserves substantial private initiative.
- It recognizes that the government possesses unique knowledge concerning national-security threats.
These characteristics distinguish the proposal from comprehensive central planning.
Yet Hayek would almost certainly identify an emerging institutional tension.
The Trump AI framework implicitly assumes that a relatively small group of evaluators can obtain sufficient knowledge to characterize the risks presented by technologies whose future significance depends upon decentralized experimentation throughout society.
The knowledge problem has not disappeared simply because artificial intelligence is more sophisticated than industrial machinery. Indeed, it has become more severe.
The Pretense of Knowledge
Hayek later warned against what he called the "pretense of knowledge." The danger arises when institutions mistake measurable fragments of reality for comprehensive understanding. Government experts may legitimately evaluate specific cybersecurity capabilities under controlled conditions. What they cannot determine in advance is the complete range of productive, defensive, scientific, commercial, educational, and institutional applications that will emerge once autonomous cognition enters an adaptive social order. Artificial intelligence is not merely a technology. It is becoming a participant in an evolving knowledge ecosystem. No thirty-day evaluation can fully anticipate that evolution.
A Hayekian Alternative
Hayek would likely distinguish between two fundamentally different approaches to governance. (1) The first attempts to direct technological evolution through centralized administrative judgment. And; (2) The second establishes general constitutional rules while allowing decentralized discovery to continue.
The latter better reflects Hayek's philosophy: Government may establish liability for demonstrable harm. It may protect critical infrastructure. It may prohibit theft, fraud, unauthorized access, and cyber aggression. It may require transparency regarding particular risks. It may facilitate independent evaluation.
What the Trump Administration should avoid is assuming responsibility for determining the permissible trajectory of human knowledge itself. The appropriate institutional objective is not comprehensive control. It is constitutional coordination.
The Fourth Wave
Here, however, the Fourth Wave departs from Hayek: Hayek assumed that markets coordinate productive activity because human beings possess dispersed knowledge and voluntarily exchange goods and services.
Artificial intelligence introduces a new phenomenon. Autonomous cognition itself increasingly becomes a productive factor. The question therefore changes. No longer is the central issue simply how markets coordinate human knowledge. The new question becomes:
How should constitutional societies recognize, measure, govern, and distribute the economic value created by laborless/autonomous cognition?
Hayek offers no direct answer because autonomous cognitive production did not exist during his lifetime. Nevertheless, his epistemological insight remains indispensable. No central planner can determine in advance the subjective economic value of AI-generated knowledge. That value must continue to emerge through decentralized experimentation and voluntary exchange. Yet decentralized valuation does not eliminate the need for standardized measurement.
A New Institutional Layer
Fourth Wave institutions require something Hayek never contemplated. They require methods for independently verifying productive autonomous cognition without centrally determining its value.
Institutions may objectively verify:
- what uncertainty existed before computation,
- what uncertainty was reduced,
- what evidence supports that reduction,
- what computational resources were consumed,
- what thermodynamic costs were incurred,
- what human participation occurred,
- whether lawful authority and property rights were respected.
These measurements establish objective evidence. Markets, communities, and constitutional institutions continue determining subjective value. Thus verification remains standardized. Valuation remains decentralized. This distinction preserves Hayek's insight while extending it into the age of autonomous cognition.
Is This The Road to Serfdom?
Not yet.
The current Executive Order remains voluntary, limited in scope, and primarily concerned with cybersecurity and national security. Those characteristics distinguish it from comprehensive administrative planning. Nevertheless, Hayek would likely warn that institutional trajectories matter. Voluntary review can evolve into mandatory certification. Technical evaluation can become administrative permission. General constitutional rules can gradually yield to discretionary bureaucratic judgment. The relevant question is therefore not whether today's framework constitutes The Road to Serfdom. The relevant question is whether future institutions preserve decentralized discovery under general constitutional rules or increasingly substitute centralized administrative judgment for the spontaneous evolution of knowledge.
That distinction, more than any particular executive order, would determine whether artificial intelligence strengthens a free constitutional society or gradually transforms it into a system in which the production of knowledge itself becomes subject to centralized control.
Hayek's greatest lesson for the Fourth Wave is therefore neither unqualified optimism nor categorical opposition. It is institutional humility. No government, corporation, or artificial intelligence can possess all the knowledge required to direct civilization. The purpose of constitutional institutions is not to replace dispersed human knowledge with centralized authority. It is to create the conditions under which dispersed knowledge, human creativity, and increasingly autonomous cognition may co-evolve within a framework that preserves liberty, lawful order, and meaningful human participation.